David Morris’ testimony before legislative committee hearing in Minnesota on a 1996 bill, H.F. 3063, the Economic Efficiency and Pollution Reduction Act of 1996 (EEPRA).
This bill ventures into new territory for the state of Minnesota. Yet it also reflects a growing body of opinion locally, nationally and internationally that our tax systems need to be restructured so that they take into account not only the needs of the present generation but the needs of future generations.
There are two principles underlying this bill. One is that when we tax something we raise its cost. When we raise its cost we use less of it. Currently we tend to overtax activities we would like to encourage, so called “goods” like investment and work and property. And we tend to undertax activities we would like to discourage, so called “bads” like inefficiency and pollution and the depletion of natural resources.
Thus our tax system has a built-in efficiency. This bill tries to correct that problem. And in so doing, it raises the cost of inefficiency and pollution and lowers the cost of work and investment and property.
There is another principle at work in this bill. A market economy works most effectively if the consumers can rely on accurate price signals. The price we pay for many of our goods does not reflect their real environmental and social cost. This is especially true for fossil fuels. This bill begins to internalize some of the real environmental costs into the price we pay for fossil fuels.